Bandung, 16 May 2023 – Halfway through 2023, which is a year that is considered full of challenges due to the tightening monetary policies of many global central banks, PT Bank Danamon Indonesia Tbk (Danamon) and PT Manulife Aset Manajemen Indonesia (MAMI) held a regular event for Danamon’s Privilege customers, the Danamon Wealth Series. In a seminar titled "How High Can You Go," which was held in Bandung on 10 May 2023, Danamon and MAMI provided smart investment solutions to customers to help them seize opportunities by taking advantage of the latest global and domestic economic conditions.
“The year 2023 is often referred to as a year that will still be full of challenges for the economy by many people. As we enter this year’s halfway mark, Danamon understands that as a financial institution, we are expected to provide the best solutions to our customers in managing their finances. Therefore, this seminar, held in collaboration with MAMI, is expected to be able to answer various questions regarding challenges in mid-2023, actions that can be taken and of course opportunities that can be seized," explained Pinastika Junia, Regional Head of West Java, PT Bank Danamon Indonesia Tbk.
Mid 2023 will still be marked by rising interest rates, threats of an economic slowdown, and liquidity tightening. These things also have an impact on investment instruments both in the stock market and the bond market. With expectations of an economic slowdown and negative sentiment from liquidity tightening, there is a possibility for corrections of the global stock markets. Meanwhile, high interest rates might have an impact in the form of increasing yields and decreasing prices of bonds.
The United States’ centra bank, The Fed, has raised interest rates by 425 bps in the range of 5.00% - 5.25%, as of April 2023. Apart from The Fed, other central banks in the world such as the ECB, BoE, including Bank Indonesia have also increased their interest rates.
Katarina Setiawan, Chief Economist & Investment Strategist, PT Manulife Aset Manajemen Indonesia (MAMI) said, “Asia has become a bright spot amid a slowdown in the world economy. The reopening of the economy in China is driving economic growth in China and the Asian region. This was demonstrated by China's economic growth which grew 4.5% YoY in Q1 2023, higher than expectations at the level of 4.0%, as well as the recovery in domestic consumption where retail sales in March 2023 grew 10.6% YoY. China's economic growth expectations will still be strong, with consensus forecasting growth at 5.0%. China's economic recovery has prompted the IMF to revise growth in the Asian region to 4.6% in 2023.”
From the domestic side, maintained inflation and the Rupiah exchange rate had driven Bank Indonesia to hold the BI 7-Day Reverse Repo Rate at the level of 5.75% on 17-18 April 2023. This policy was carried out to ensure that 2023 inflation fell to the range of 3% ± 1%. Indonesia will also face a political year by holding simultaneous General Elections in 2024, with the campaign period starting in November 2023, which is expected to also affect domestic economic conditions.
"Keep in mind that the market can always find a gap to perform well again. Historically, the IHSG’s yield from January 2001 – April 2023 was 1586%, equivalent to 10.04% p.a. Successful investing takes time, discipline, and patience. The Indonesian stock price index has a tendency to move in the same direction with Indonesia's economic growth with a correlation coefficient of 0.97," explained Yulius Ardi, Wealth Management Head, PT Bank Danamon Indonesia Tbk.
Irman Faiz, an Economist for PT Bank Danamon Indonesia Tbk, also explained that the realization of economic growth in the first quarter of 2023 of 5.03% YoY was above the market estimation consensus. This reflects the resilience of the Indonesian economy amidst global economic slowdown. Increased domestic mobility and accelerated government spending are the main drivers of growth this year. Danamon estimates that Indonesia's economic growth can grow quite stable compared to last year at 5.3% YoY in 2023.
Indonesia's economic growth in the coming quarters could still be better, considering economic activity during the last Eid al-Fitr and the upcoming General Election series of agenda, which will begin in the fourth quarter of 2023 and expected to be a positive catalyst for growth.
"Bank Indonesia estimates that Indonesia's economic growth this year will approach the upper limit of GDP growth at the level of 4.5% - 5.3%. Indonesia's strong fundamentals are predicted to continue this year, so that the Indonesian capital market is also expected to be more resilient against the threat of global uncertainty. Investors can consider investing in fixed income mutual funds that have a combination with corporate bonds, or SUN that have high coupons and long tenors to get more optimal returns. After reaching the peak of interest rates, the volatility of the stock market can subside further, and investors can begin to enter the stock asset class gradually," said Katarina.
Equity Mutual Funds with large capitalization shares, a defensive sector, and those that distribute dividends can be a priority for investors.
“Danamon provides several options which can be used such as Bonds and Fixed Income Mutual Funds, with interest rates that have reached the peak of the cycle; Equity Mutual Funds based on domestic securities and stocks in the Asian region," said Yulius Ardi.
The Danamon Wealth Series event with MAMI provided useful insights for investors to take advantage of opportunities and navigate investment challenges from global and domestic economic and market conditions.
“Market fluctuations are normal and part of investment. Downturns create attractive investment opportunities. When there's a downturn, Dollar Cost Averaging helps get the average price down. Investment diversification helps reduce the risk of fluctuations. There is no need to panic with news headlines, but we must be prepared with an emergency fund," added Yulius Ardi.
In addition to various mutual fund products, Danamon also provides a variety of bond investment products, FX and structured products that can meet customer needs. Experienced Investment Specialist who are ready to provide advice and consultancy regarding investments is also part of Danamon's efforts to provide optimum service to customers.
Danamon also regularly works with various investment manager partners to hold events such as Market Insights, Webinars, Financial Literacy programs as well as various attractive offers related to Wealth Management products. Customers can also make investments and foreign currency conversion transactions through D-Bank PRO with competitive exchange rates.
"Danamon is committed to continue to grow together with our customers as a customer-centric organization to become "Your Bank of Choice", by helping customers take control of their goals and financial needs in various situations, both globally and domestically," concluded Pinastika.
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PT Bank Danamon Indonesia Tbk